A new microbial isolate, Bacillus sp. U88, transformed 12-hydroxyoctadecanoic acid to 12,15-, 12,16- and 12,17-dihydroxyoctadecanoic acids when grown aerobically in 1% yeast extract medium at 30 degrees C and shaken at 250 rpm for 5 days. These three dihydroxyfatty acids were derivatized with Trimethylsilyl ether and identified by GC-MS analysis. The yield of 12,15-, 12,16- and 12,17-dihydroxyoctadecanoic acids after 5 day incubation were 2.8%, 7.1% and 1.1%, respectively.